Albina Kuzmenko
I: 1-12.
a. Property taxes - Local government.
b. Excise taxes – Imposed by Federal government on alcohol, tobacco, gasoline. Many state and local governments impose similar excise taxes on goods and services.
c. Sales taxes – Major source of revenue for state and local governments.
d. Income taxes – Federal, most states, and many local governments.
e. Employment taxes – Federal and state unemployment compensation taxes.
I: 1-13.
a. Equity – Tax rates should be equitable or fair to taxpayers.
Certainty – Provides certainty for taxpayers regarding the amount of their annual tax responsibility.
Convenience – Provides convenience for taxpayers to pay and for the government to collect.
Economy – Requires limited compliance and administrative cost. Complying with the tax law is expensive for the most of the taxpayers.
Simplicity – Tax system must be easy to understand and comply with.
b. 1. Federal income tax – Equity, Certainty, Economy.
2. State sales tax – Certainty, Simplicity.
3. Local ad valorem property tax – Economy, Certainty, Simplicity.
I: 1-15.
1. Raise Revenue.
2. Private investment stimulation.
3. Reduce unemployment
4. Stimulate activities for the small businesses.
5. Stimulate contributions for charitable organizations.
I: 1-39
a.
| | 100,000.00 | | Total Income |
| | | | |
Tax-exempt bond interest | (5,000.00) | (5,000.00) | | |
| | 95,000.00 | | Gross Income |
| | | | |
| | | | |
Item. Deductn. | (20,000.00) | | | |
Persn. Exempt. | (3,650.00) | | | |
Bus. Expense | (9,500.00) | (33,150.00) | | Deductions from AGI |
| | 61,850.00 | | Taxable income for 2010 |
4,681.50 + 0.25% (61,850.00 - 34,000.00) = 11,644.00 Federal Tax Liability for 2010
b.
Marginal Tax Rate:
61,850.00 Taxable Income
8,375.00 * 10%
25,625.00 * 15%
27,850.00 * 25% Marginal...